Low Land Supply Is Behind the Housing Crisis

The housing crisis is among the biggest challenges across the country. Home prices and apartment rents are frequently reaching new records, thanks largely to a housing shortage. While there are several factors at play—from high construction costs to limited labor—the limited availability of developable land is a fundamental challenge. No matter how much is costs to build, you have to have a land site.

“The lack of developable land today is a direct result of the Great Recession when the housing and financial markets crashed,” Noah Breakstone, CEO at BTI Partners, tells GlobeSt.com. “During these years, the development of new residential communities came to a halt for several reasons, including the lack of financing for developers and home buyers and an abundance of discounted inventory due to the wave of foreclosed homes. Today, we are seeing the consequences of a relatively prolonged gap in the acquisition, entitlement, and development of land for new residential communities nearly a decade ago.”

It can take two to four years, depending on the location, to prep ready-to-build land for new development. This includes securing entitlements and permits. “We missed several years of that process so, as a result, we have less developable land available for new construction,” says Breakstone. “This has resulted in a significant national housing deficit.”

Both single-family and multifamily developers are experiencing challenges securing land, and the problem is dragging new construction velocity. Over the last 50 years, new housing starts averaged 1.5 million to 1.6 million, according to Breakstone, but in the last decade, new housing starts averaged only 500,000 units annually. “This prolonged reduction in starts has put significant pressure on the existing housing stock and caused home values to skyrocket,” he explains. “As land developers, our core business is to buy large land tracts in Florida and complete the prerequisite work for home builders to deliver new residential homes and ease the current housing crisis.”

To build more homes in the face of limited land, Breakstone anticipates both small and large metros will increase density to bring more units to market. This, he says, will blur the lines between the urban core and the surrounding suburbs. “As a result, each market segment has its own advantages and disadvantages,” says Breakstone. “While we see accelerated activity in the next-in-line suburban markets, we also see the active revitalization/redevelopment of many urban markets that are creating new, vibrant and walkable neighborhoods.”

Some examples are already surfacing. Breakstone notes his companies mixed-use developments like Westshore Marina District of South Tampa and our Hollywood Young Circle projects located in Hollywood, Florida, as examples. “These developments are creating new and re-imagined neighborhoods within the urban core by linking people together in a way that continues to blend the suburban-urban line.”

BTI has more projects in the pipeline. The firm is preparing 1400 acres of land in Osceloa County, Florida, a city 20 miles from Downtown Orlando, for development.